Filing
89

Commonwealth of Virginia, Ex Rel. Kenneth T. Cuccinelli, II v. Sebelius
Doc. 89
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION COMMONWEALTH OF VIRGINIA, EX REL. KENNETH T. CUCCINELLI, II, in his official capacity as Attorney General of Virginia, Plaintiff, v. KATHLEEN SEBELIUS, Secretary of the Department of Health and Human Services, in her official capacity, Defendant. ) ) ) ) ) ) ) ) Civil Action No. 3:10cv188 ) ) ) ) ) )
PLAINTIFF'S MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT KENNETH T. CUCCINELLI, II Attorney General of Virginia E. DUNCAN GETCHELL, JR. Virginia State Bar No. 14156 Solicitor General dgetchell@oag.state.va.us Counsel of Record STEPHEN R. MCCULLOUGH Virginia State Bar No. 41699 Senior Appellate Counsel smccullough@oag.state.va.us CHARLES E. JAMES, JR. Chief Deputy Attorney General WESLEY G. RUSSELL, JR. Virginia State Bar No. 38756 Deputy Attorney General wrussell@oag.state.va.us OFFICE OF THE ATTORNEY GENERAL 900 East Main Street Richmond, Virginia 23219 Telephone: (804) 786-2436 Facsimile: (804) 786-1991 Counsel for the Commonwealth of Virginia
September 3, 2010
Dockets.Justia.com
TABLE OF CONTENTS Page I. II. III. INTRODUCTION ................................................................................................................. 1 COMMONWEALTH`S STATEMENT OF UNDISPUTED FACTS ................................. 2 THE MANDATE AND PENALTY ARE BEYOND THE OUTER LIMITS OF THE COMMERCE CLAUSE ........................................................... 5 A. The Mandate and Penalty are Contrary to the Text of the Commerce Clause and Foundational Understandings ................................................................... 6 1. 2. The Mandate and Penalty are Not Supported by the Text of the Commerce Clause ................................................................................................. 6 The Historical Context in which the Commerce Clause was Drafted Makes it Highly Unlikely that it Included a Power to Command a Citizen to Purchase Goods or Services From Another Citizen .................................................................................................... 8 There is No Tradition of Using the Commerce Clause to Require a Citizen to Purchase Goods or Services from Another Citizen................................................................................................................. 10
3.
B.
As this Court Found in Denying the Secretary`s Motion to Dismiss, the Mandate and Penalty are Outside the Existing Outer Limits of the Commerce Clause and Associated Necessary and Proper Clause as Measured by Supreme Court Precedent ................................................................ 12
IV.
THE MANDATE AND PENALTY CANNOT BE SUSTAINED UNDER THE TAXING POWER ...................................................................................................... 18 THE FACT THAT THE MANDATE AND PEANLTY ARE BEYOND THE OUTER LIMITS OF THE COMMERCE CLAUSE IS FATAL TO THE SECRETARY`S CASE ....................................................................................................... 22 THE UNCONSTITUTIONAL MANDATE AND PENALTY ARE NOT SEVERABLE FROM THE REMAINDER OF THE ACT, AND THEREFORE, PPACA FAILS IN ITS ENTIRETY .......................................................... 24
V.
VI.
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VII.
IN ADDITION TO DECLARING PPACA UNCONSTITUTIONAL AND DECLARING THE VIRGINIA HEALTH CARE FREEDOM ACT TO BE A VALID EXERCISE OF SOVEREIGN POWER, THE COURT SHOULD ENJOIN THE SECRETARY FROM FURTHER IMPLEMENTATION OF PPACA.............................................................................................................................. 29 A. B. C. The Commonwealth`s Sovereign Injury Constitutes Irreparable Harm ........................................................................................................................ 29 The Remedies Available at Law, Such as Monetary Damages, are Inadequate to Compensate for the Commonwealth`s Injury ................................... 30 Considering the Balance of Hardships Between the Commonwealth and the Secretary, a Remedy in Equity is Warranted ................................................................................................................ 30 The Public Interest Would not be Disserved by a Permanent Injunction ................................................................................................................ 31
D. VIII.
THIS COURT SHOULD GRANT SUMMARY JUDGMENT TO THE COMMONWEALTH ON THE SECRETARY`S AFFIRMATIVE DEFENSES ....................................................................................................................... 32
CONCLUSION ............................................................................................................................. 34 CERTIFICATE OF SERVICE ...................................................................................................... 35
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TABLE OF AUTHORITIES Page
CASES Alaska Airlines, Inc. v. Brock, 480 U.S. 678 (1987) ............................................................................................... 24, 25, 26, 28 Arizona v. California, 460 U.S. 605 (1983) ................................................................................................................. 32 Bailey v. Drexel Furniture Co. (Child Labor Tax Case), 259 U.S. 20, 42 S. Ct. 449 (1922) ............................................................................................ 21 Bd. of Trs. of the Univ. of Ill. v. United States, 289 U.S. 48 (1933) ................................................................................................................... 18 Bennett v. MIS Corp., 607 F.3d 1076 (6th Cir. 2010).................................................................................................... 1 Citibank v. Oxford Properties & Finance Ltd., 688 F.2d 1259 (9th Cir. 1982)............................................................................................ 32, 33 Diamond v. Charles, 476 U.S. 54 (1986) ................................................................................................................... 30 eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) ................................................................................................................. 29 Elrod v. Burns, 427 U.S. 347 (1976) ................................................................................................................. 30 Free Enterprise Fund v. Public Company Accounting Oversight Board, 130 S. Ct. 3138, 177 L. Ed. 2d 706 (2010) .................................................................. 23, 24, 31 Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824) ............................................................................... 7, 10, 11, 13, 14 Giovani Carandola, Ltd. v. Bason, 303 F.3d 507 (4th Cir. 2002).................................................................................................... 31 Gonzales v. Oregon, 546 U.S. 243 (2006) ................................................................................................................. 15 iii
Gonzales v. Raich, 545 U.S. 1 (2005) .............................................................................................................. passim Int'l Ass'n of Bridge, Structural & Ornamental Iron Workers Union #1 v. Nationwide Precast Specialists, Inc., 1992 U.S. Dist. LEXIS 8969 (N.D. Ill. June 23, 1992) ........................................................... 33 Life Partners, Inc. v. Morrison, 484 F.3d 284, 292 (4th Cir. 2007), cert. denied, 2007 U.S. LEXIS 12349 (Dec. 3, 2007) ............................................................. 16 Linder v. United States, 268 U.S. 5 (1925) ..................................................................................................................... 21 Lochner v. New York, 198 U.S. 45 (1905) ................................................................................................................... 12 M'Culloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819) ............................................................................................. 5, 24 Monsanto Co. v. Geerston Seed Farms, 130 S. Ct. 2743, 177 L. Ed. 2d 461 (2010) .............................................................................. 29 New York v. United States, 505 U.S. 144 (1992) ........................................................................................................... 23, 31 R.R. Labor Executives' Ass'n v. Gibbons, 455 U.S. 457 (1982) ................................................................................................................. 21 R.R. Ret. Bd. v. Alton R.R. Co., 295 U.S. 330 (1935) ................................................................................................................. 12 Ransom v. Babbitt, 69 F. Supp. 2d 141 (D.D.C. 1999) ........................................................................................... 33 Rodriguez de Quijas v. Shearson/American Express, 490 U.S. 477 (1989) ............................................................................................... 21, 22, 23, 24 Rosenberger v. Rector & Visitors of the Univ. of Va., 515 U.S. 819 (1995) ................................................................................................................. 19 Sonzinsky v. United States, 300 U.S. 506 (1937) ................................................................................................................. 19 Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 60 S. Ct. 907 (1940) .......................................................................................... 20
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Thomas v. United States, 192 U.S. 363 (1904) ................................................................................................................. 20 United States v. Butler, 297 U.S. 1 (1936) ................................................................................................... 19, 20, 21, 22 United States v. Comstock, 130 S. Ct. 1949, 176 L. Ed. 2d 878 (2010) .................................................................. 16, 17, 24 United States v. La Franca, 282 U.S. 568 (1931) ..................................................................................................... 19, 20, 22 United States v. Lopez, 514 U.S. 549 (1995) .......................................................................................................... passim United States v. Morrison, 529 U.S. 598 (2000) .......................................................................................................... passim United States v. O'Brien, 130 S. Ct. 2169, 176 L. Ed. 2d 979 (2010) .............................................................................. 21 United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U.S. 213 (1996) ................................................................................................................. 19 Wickard v. Filburn, 317 U.S. 111 (1942) .......................................................................................................... passim Zepeda v. INS, 753 F.2d 719 (9th Cir. 1983).................................................................................................... 30 CONSTITUTIONAL PROVISIONS Art. I, § 8 ............................................................................................................................. 6, 16, 20 Art. I, § 9 ....................................................................................................................................... 20
STATUTES 124 Stat. 119 (2010)........................................................................................................................ 2 15 U.S.C. § 1011 ........................................................................................................................... 16 PPACA § 1501.......................................................................................................................... 2, 18 v
PPACA § 1501(a)(2)(H) ............................................................................................................... 25 PPACA § 1501(a)(2)(I)................................................................................................................. 25 PPACA § 1501(a)(2)(J) ................................................................................................................ 26 PPACA § 5000A(b)(1) ................................................................................................................. 18 PPACA § 9001.............................................................................................................................. 18 PPACA § 9004.............................................................................................................................. 18 PPACA § 9015.............................................................................................................................. 18 PPACA § 9017.............................................................................................................................. 18 PPACA § 10106.............................................................................................................................. 2 PPACA § 10106(a) ................................................................................................................. 25, 26 PPACA § 10907............................................................................................................................ 18 Virginia Code § 38.2-3430.1:1 ....................................................................................................... 2 OTHER AUTHORITIES The American Heritage Dictionary 457 (Houghton Mifflin Co. Boston 1981) ........................... 21 Black's Law Dictionary at 304 (West 9th ed. 2008) ....................................................................... 7 The Budgetary Treatment of an Individual Mandate to Buy Health Insurance, CBO Memorandum, at 1 (August 1994) .................................................................................... 3 Cong. Research Serv. Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis 3 (2009) ............................................................................................ 3 The Declaration and Resolves of the First Continental Congress of October 14, 1774.................................................................................................................... 8 The Founder's Constitution, Vol. 2, Art. 1, § 8, Clause 3 (Commerce), Doc. 9 (Univ. of Chicago Press 2010) ..................................................................................... 11 A Pocket Dictionary (3d ed. London 1765) .................................................................................... 6 N. Baily, Dictionarium Britannicum or a more complete Universal Etymological English Dictionary than any Extant (London 1730) ....................................... 6, 7 vi
George Bancroft, History of the United States, Vol. III at 287 (New York D. Appleton & Company 1896) .............................................................................. 9 David P. Currie, The Constitution in the Supreme Court the First Hundred Years 1789-1888 at 173 (Univ. of Chicago Press, 1985) ............................................................. 11, 13 Adam Littleton, Dr. Adam Littleton's Latin dictionary, in four Parts: I. An English-Latin, II. A Latin-classical, III. A Latin-Proper, IV. A Latin-barbarous, Part II (no pagination) (6th ed. London 1735) ..................................... 6 John Mair, The Tyro's Dictionary, Latin and English at 96 (2d ed. Edinburgh 1763) ............................................................................................................ 6 Adam Smith, Wealth of Nations, at 9-10, 19, 22-23, 26, 81 (Prometheus Brooks Amherst N.Y. 1991) ................................................................................. 8 Noah Webster, An American Dictionary of the English Language at 42 (S. Converse New York 1828) ................................................................................................... 7 RULES Moore`s Federal Practice ­ Civil § 12.35C .................................................................................. 34 Fed. R. Civ. P. 12 .......................................................................................................................... 32 Fed. R. Civ. P. 12(h) ..................................................................................................................... 33 Fed. R. Civ. P. 12(h)(2)................................................................................................................. 33 Fed. R. Civ. P. 19 .......................................................................................................................... 32 Fed. R. Civ. P. 19 (a)(1)(B) .......................................................................................................... 33 Fed. R. Civ. P. 19(a) ......................................................................................................... 32, 33, 34 Fed. R. Civ. P. 19(a)(1)(A) ........................................................................................................... 33 Fed. R. Civ. P. 19(b) ..................................................................................................................... 32 Fed. R. Civ. P. 21 .......................................................................................................................... 34 Fed. R. Civ. P. 56 (c)(2) .................................................................................................................. 1 vii
LEGISLATIVE MATERIALS Charles C. Tansill, Documents Illustrative of the Formation of the Union of the American States Library of Congress Legislative Reference Service, No. 398 (Government Printing Office 1927) ............................................................................ 9 Cong. Rec. H1307 (March 10, 2010) .............................................................................................. 4 Cong. Rec. S10965 (Nov. 2, 2009) ................................................................................................. 3 Cong. Rec. S10973 (Nov. 2, 2009) ................................................................................................. 3 Cong. Rec. S11397 (Nov. 17, 2009) ............................................................................................... 3 Cong. Rec. S11401 (Nov. 17, 2009) ............................................................................................... 3 Cong. Rec. S11819 (Nov. 19, 2009) ............................................................................................... 3 Cong. Rec. S11982 (Nov. 30, 2009) ............................................................................................... 3 Cong. Rec. S12263 (Dec. 3, 2009) ................................................................................................. 4 Cong. Rec. S12487 (Dec. 5, 2009) ................................................................................................. 4 Cong. Rec. S12977 (Dec. 11, 2009) ............................................................................................... 4 Cong. Rec. S12981 (Dec. 11, 2009) ............................................................................................... 4 Cong. Rec. S13144 (Dec. 14, 2009) ............................................................................................... 4 Cong. Rec. S13344 (Dec. 17, 2009) ............................................................................................... 4 Cong. Rec. S13756 (Dec. 22, 2009) ............................................................................................... 4
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I. INTRODUCTION On August 2, 2010, this Court denied the Secretary`s motion to dismiss for failure to state a claim, stating While this case raises a host of complex constitutional issues, all seem to distill to the single question of whether or not Congress has the power to regulate ­ and tax ­ a citizen`s decision not to participate in interstate commerce. Neither the U.S. Supreme Court nor any circuit court of appeals has squarely addressed this issue. No reported case from any federal appellate court has extended the Commerce Clause or Tax Clause to include the regulation of a person`s decision not to purchase a product, notwithstanding its effect on interstate commerce. Given the presence of some authority arguably supporting the theory underlying each side`s position, this Court cannot conclude at this stage that the Complaint fails to state a cause of action. (Doc. 84 at 31). Because the Secretary bore the burden of proving that Plaintiffs` claims fail as a matter of law, the motion to dismiss was denied. (Id., citing Bennett v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir. 2010)). On August 16, 2010, pursuant to the May 6, 2010 Order of this Court, (Doc. 13), the Secretary filed her Answer. (Doc. 87). Subsequently, the Commonwealth timely filed its motion for summary judgment. Pursuant to Fed. R. Civ. P. 56 (c)(2), the Commonwealth bears the burden to show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Supported by this Court`s ruling that [n]ever before has the Commerce Clause and the associated Necessary and Proper Clause been extended this far, (Doc. 84 at 25), and further aided by controlling authority on the nature and limits of the taxing power, the Commonwealth demonstrates below that it has satisfied its burden.
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II. COMMONWEALTH'S STATEMENT OF UNDISPUTED FACTS Pursuant to Local Rule 56(b), the Commonwealth submits the following statement of facts believed to be undisputed. 1. At the 2010 Regular Session of the Virginia General Assembly, Virginia Code § 38.2-3430.1:1, the Health Care Freedom Act, was enacted with the assent of the Governor. (Doc. 1 at 1 ¶ 1; Doc. 87 at 1 ¶ 2). 2. That statute provides: No resident of this Commonwealth, regardless of whether he has or is eligible for health insurance coverage under any policy or program provided by or through his employer, or a plan sponsored by the Commonwealth or the federal government, shall be required to obtain or maintain a policy of individual insurance coverage except as required by a court or the Department of Social Services where an individual is named a party in a judicial or administrative proceeding. No provision of this title shall render a resident of this Commonwealth liable for any penalty, assessment, fee, or fine as a result of his failure to procure or obtain health insurance coverage. This section shall not apply to individuals voluntarily applying for coverage under a stateadministered program pursuant to Title XIX or Title XXI of the Social Security Act. This section shall not apply to students being required by an institution of higher education to obtain and maintain health insurance as a condition of enrollment. Nothing herein shall impair the rights of persons to privately contract for health insurance for family members or former family members. (Doc. 1 ¶ 3; Doc. 87 at 1 ¶ 3). 3. Subsequently, PPACA was enacted into law. 124 Stat. 119, 1029 (2010). 4. Congress expressly stated that the mandate and penalty were essential elements of the act without which the statutory scheme cannot function. (PPACA § 1501; § 10106). 5. The Federal act contains no severability clause. (PPACA passim). 6. Kathleen Sebelius in her official capacity is presently responsible for administering PPACA. (PPACA passim; Doc. 1 at 3 ¶ 8; Doc. 87 at 2 ¶ 8). 2
7. Before the act was passed, the Senate Finance Committee asked the Congressional Research Service to opine on the constitutionality of the individual mandate. The Service replied: Whether such a requirement would be constitutional under the Commerce Clause is perhaps the most challenging question posed by such a proposal, as it is a novel issue whether Congress may use this Clause to require an individual to purchase a good or a service. Cong. Research Serv. Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis 3 (2009). Similar advice was given by the Congressional Budget Office in connection with the Clinton administration health care initiative. See The Budgetary Treatment of an Individual Mandate to Buy Health Insurance, CBO Memorandum, at 1 (August 1994), (A available mandate requiring at all
http://www.cbo.gov/ftpdocs/48xx/doc4816/doc38.pdf
individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. An individual mandate would have two features that, in combination, would make it unique. First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government.). 8. PPACA passed the Senate on a party line vote with considerable minority protest. See, e.g., Cong. Rec. Nov. 2, 2009 S10965 (no bill); id., S10973 (bill being drafted behind closed doors); id., Nov. 17, 2009 S11397 (The majority leader has had in his office a secret bill that he is working on that we have not seen yet.); id., S11401 (No Child Left Behind got 7 weeks on the floor ­ We don`t even have a bill yet); id., Nov. 19, 2009 S11819 (bill is a shell, not the real one); id., Nov. 30, 2009 S11982 (Official debate 3
begins); id., Dec. 3, 2009 S12263 (bill has been on floor for 3 days and never has been in committee); id., Dec. 5, 2009 S12487 (majority will not slow down); id., Dec. 11, 2009 S12981 (We are going to have three Democratic amendments and one Republican amendment voted on, and the Democrats wrote the bill); id., S12977 (votes on amendments blocked; In the meantime, this backroom deal that is being cut, which we haven`t seen ­ supposedly it has been sent to the CBO to see what it would cost); id., Dec. 14, 2009 S13144 (There is somewhere in this building a hidden bill, known as the manager`s amendment, which is being drafted by one or two or three people . . .); id., Dec. 17, 2009 S13344 (bill is not being given the legislative time it deserves because the polls show a majority of Americans are against it and thus it has become a political nightmare for the majority who now simply want to ram it through before Christmas even though no one outside the majority leader`s conference room has seen it yet); id., Dec. 22, 2009 S13756 (Nebraska deal); Id., Mar. 10, 2010 H1307 (reconciliation being used because bill could not re-pass the Senate). 9. In contrast, the General Assembly of Virginia passed several identical versions of the Virginia Health Care Freedom Act (HCFA) on a bi-partisan basis, with margins as high as 90 to 3 in the House of Delegates and 25 to 15 in the Senate. See SB 417 Individual health insurance coverage; resident of State shall not be required to obtain a policy, available at http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+SB417. At the time of passage of the HCFA, the Virginia House of Delegates contained 59 Republicans, 39 Democrats and 2 Independents, while the Virginia Senate contained 22 Democrats and 18 Republicans. See attached Declarations of Bruce Jamerson and Susan Schaar.
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10. Although the mandate does not take effect for several years, PPACA imposes immediate and continuing burdens on Virginia. (Aff. Sec`y Hazel) (Doc. 28). III. THE MANDATE AND PENALTY ARE BEYOND THE OUTER LIMITS OF THE COMMERCE CLAUSE.
In PPACA, Congress appeals only to the Commerce Clause for its claimed power to enact the mandate and associated penalty. But the Supreme Court has never extended the Commerce Clause beyond the regulation of (1) use of the channels of interstate commerce; (2) the instrumentalities of interstate commerce; and (3) activities that substantially affect interstate commerce. United States v. Lopez, 514 U.S. 549, 558-59 (1995) (emphasis added). Only the third category has been implicated by the arguments made by the Secretary. (See Doc. 84 at 19). The passive status of being uninsured falls within none of these categories, whether or not that status can be traced back to an economic decision. In her Answer, the Secretary pleads that the status of being uninsured is an economic decision that has a substantial effect on interstate commerce. (Doc. 87 at 3 ¶ 17). This strange and awkward formulation serves merely to emphasize the correctness of this Court`s ruling that the Secretary`s position is well outside of the currently established limits of the Commerce Clause. (Doc. 84 at 18, 25, and 31). Although the Commonwealth`s position is in accord with existing precedent, acceptance of the Secretary`s position would require a change in the existing law. It is true that the Secretary also pleads that Congress had a rational basis to conclude that the minimum coverage provision is essential to ensure the success of the [Act`s] larger regulation of the interstate health insurance market. (Doc. 87 at 3 ¶ 14). But this is in essence an appeal to the Necessary and Proper Clause, which cannot be employed contrary to the letter and spirit of the Constitution. M'Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 421 (1819). Because the 5
power claimed here would alter the federal structure of the Constitution by creating an unlimited federal power indistinguishable from a national police power, it cannot be a proper use of the Necessary and Proper Clause. United States v. Morrison, 529 U.S. 598, 618-19 (2000) (We always have rejected readings of the Commerce Clause and the scope of federal power that would permit Congress to exercise a police power.). Because the limits of the power claimed by the Secretary are not judicially discernible, the claimed power is not only contrary to constitutional text and first principles, it is also contrary to binding Supreme Court precedent. A. The Mandate and Penalty are Contrary to the Text of the Commerce Clause and Foundational Understandings. 1. The Mandate and Penalty are Not Supported by the Text of the Commerce Clause. Article I, § 8 of the Constitution provides that The Congress shall have Power . . . To regulate Commerce with Foreign Nations, and among the several States, and with the Indian Tribes. As the Commonwealth has previously noted in briefing the Secretary`s motion to dismiss, classically educated Founders would have known that the word commerce is derived from the Latin commercium. See N. Baily, Dictionarium Britannicum or a more complete Universal Etymological English Dictionary than any Extant (London 1730); A Pocket Dictionary (3d ed. London 1765) (both available at The Library of Virginia Special Collections). Thus, they would have understood commerce as comprehending traffick, dealing, merchandise, buying and selling, bartering of wares; also an intercourse or correspondence of dealing . . . . Adam Littleton, Dr. Adam Littleton's Latin dictionary, in four Parts: I. An English-Latin, II. A Latinclassical, III. A Latin-Proper, IV. A Latin-barbarous, Part II (no pagination) (6th ed. London 1735) (Library of Va.). Had they consulted John Mair, The Tyro's Dictionary, Latin and English at 96 (2d ed. Edinburgh 1763) (Library of Virginia with autograph of P. Henry and of Patrick 6
Henry Fontaine), they would have seen commercium rendered as trade, traffic, commerce, intercourse. Those who stopped with an English dictionary might have seen commerce defined as trade or traffick in buying or selling. N. Baily, supra. This collection of terms is the way that the word has been historically understood both in language and law. Noah Webster in 1828 defined commerce as an interchange or mutual change of goods, wares, productions, or property of any kind, between nations or individuals, either by barter, or by purchase and sale; trade; traffick. Noah Webster, An American Dictionary of the English Language at 42 (S. Converse New York 1828) (facsimile). These terms echo in Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 18990 (1824) (Commerce, undoubtedly is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.). See also Black's Law Dictionary at 304 (West 9th ed. 2008) (The exchange of goods and services, especially on a large scale involving transportation between cities, states and nations.). As Justice Thomas has noted, the founding generation distinguished between commerce on the one hand, and manufacturing or agriculture on the other, as distinct things. Lopez, 514 U.S. at 586 (Thomas concurring). However, there is nothing illogical about the Supreme Court`s inclusion of manufacturing and agriculture within the modern understanding of commerce because they are similar and related things in a continuum of commercial activities. Nor was it illogical to hold that commerce consists of the whole of voluntary commercial activity in a certain commodity. Wickard v. Filburn, 317 U.S. 111, 114, 118-19 (1942). Even where an agricultural product is raised for home consumption, it is still part of the total stock which in the aggregate regulates and controls price through the law of supply and demand. Id.; Gonzales v. Raich, 545 U.S. 1 (2005).
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In this respect, even Wickard and Raich fall short of doing violence to the understanding of the founding generation that commerce, industry, labor, agriculture, trade and navigation were all constituents of a certain propensity in human nature . . . to truck, barter, and exchange one thing for another; the end result of which was that mankind brought the different produces of their respective talent . . . , as it were, into a common stock, where every man may purchase whatever part of the produce of other men`s talents he has occasion for. Adam Smith, Wealth of Nations, at 9-10, 19, 22-23, 26, 81 (Prometheus Brooks Amherst N.Y. 1991) (facsimile). This is commerce. Its hallmarks are spontaneity and voluntary activity; not a command to buy something. The claim that commerce means not commercial activity but mere passivity is violently discordant with any normal use of the word commerce at the Founding or at any subsequent time. The claim that the word commerce means what the Secretary says it means treats the text of the Constitution with post-modernist disrespect. 2. The Historical Context in which the Commerce Clause was Drafted Makes it Highly Unlikely that it Included a Power to Command a Citizen to Purchase Goods or Services From Another Citizen.
As the Commonwealth noted in its opposition to the Secretary`s motion to dismiss, the American Revolution and national independence resulted from parliament`s claimed right to legislate for America. First, parliament passed the Stamp Act, only to see it repealed in the face of furious opposition. Then came the Townshend Acts, placing a duty on paper, glass, lead, paint and tea. As the struggle continued, all of the taxes except those on tea were repealed. That remaining tax, however, led to the Boston Tea Party, the Intolerable Acts, and the First Continental Congress. Throughout this period, from the Stamp Act forward, Americans
responded with boycotts under the name of non-importation and non-consumption agreements. The Declaration and Resolves of the First Continental Congress of October 14, 1774 cheerfully consent[ed] to the operation of such acts of the British Parliament, as are bonfide, 8
restrained for the regulation of our external commerce, for the purpose of securing the commercial advantages of the whole empire to the mother-country, and the commercial benefits of its respective members. However, the Continental Congress at the same time and in the same document promised [t]o enter into a non-importation, non-consumption, and non-exportation agreement or association. Charles C. Tansill, Documents Illustrative of the Formation of the Union of the American States Library of Congress Legislative Reference Service, No. 398 (Government Printing Office 1927), available at http://avalon.law-
yale.edu/18th_century/resolves.asp. Such boycott agreements were generally considered lawful even by the royal colonial governments. For example [a]t New York the merchants held a meeting to join with the inhabitants of Boston; and against the opinion of the governor, the royal council decided that the meetings were legal; that the people did but establish among themselves certain rules of economy, and had a right to dispose of their own fortune as they pleased. George Bancroft, History of the United States, Vol. III at 287 (New York D. Appleton & Company 1896). Later, in the same colony where the agreement of non-importation originated, every one, without so much as dissentient, approved it as wise and legal; men in high station declared against the revenue acts; and the governor wished their repeal. Massachusetts, Governor Hutchinson looked to his council; and they would take no part in breaking up the system of non-importation. He called in all the justices who lived within fifteen miles; and they thought it not incumbent to interrupt the proceedings. He sent the sheriff into the adjourned meeting of the merchants with a letter to the moderator, requiring them in his majesty`s name to disperse; and the meeting of which justices of peace, selectmen, representatives, constables, and other officers made a part, sent him an answer that their assembly was warranted by law. Id. at 369. Even where legislatures were dissolved to prevent the adoption of resolutions, the non-importation movement flourished. In Virginia, upon dissolution of the General Assembly, 9 Id. at 359. In
the burgesses met by themselves and adopted the resolves which Washington had brought with him from Mount Vernon, and which formed a well digested, stringent, and practical scheme of non-importation. The assembly of Delaware adopted the Virginia resolutions word for word: and every colony South of Virginia followed the example. Id. at 348. In light of this
experience, the founding generation would have regarded as preposterous any suggestion that Great Britain could have solved its colonial problems by commanding Americans to purchase tea under the generally conceded power of parliament to regulate commerce. Additional historical arguments against the power of Congress to enact the mandate and penalty can be almost endlessly adduced. For example, Alexander Hamilton at the New York convention not[ed] that there would be just cause for rejecting the Constitution if it would enable the Federal Government to penetrate the recesses of domestic life, and control, in all respects, the private conduct of individuals.` Lopez, 514 U.S. at 592. What cannot be adduced is a countervailing historical example under the Commerce Clause in favor of the mandate and penalty. 3. There is No Tradition of Using the Commerce Clause to Require a Citizen to Purchase Goods or Services from Another Citizen.
For nearly a century after Gibbons v. Ogden, the Court`s first Commerce Clause case, its decisions . . . under the Commerce Clause dealt rarely with questions of what Congress might do in the exercise of its granted power under the Clause, and almost entirely with the permissibility of state activity which it was claimed discriminated against or burdened interstate commerce. Wickard, 317 U.S. at 121. Whatever else might be said about these dormant or negative Commerce Clause cases, they seem to have advanced the core intent of the Commerce Clause, at least as understood by James Madison.
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Writing in January 1788 in No. 42 of The Federalist, Madison addressed the regulation of Foreign and Indian Commerce without clearly differentiating them from Interstate Commerce. The Founder's Constitution, Vol. 2, Art. 1, § 8, Clause 3 (Commerce), Doc. 9, available at http://press-pubs.uchicago.edu/Founders/a1_8_3_commerces9.html. (Univ. of Chicago Press
2010). Years later he explained why in a letter dated February 13, 1829 to Joseph C. Cabel. For a like reason, I made no reference to the power to regulate commerce among the several States. I always foresaw that difficulties might be started in relation to that power which could not be fully explained without recurring to views of it, which, however just, might give birth to specious though unsound objections. Being in the same terms with the power over foreign commerce, the same extent, if taken literally, would belong to it. Yet it is very certain that it grew out of the abuse of the power by the importing States in taxing the non-importing, and was intended as a negative and preventive provision against injustice among the States themselves, rather than as a power to be used for the positive purposes of the General Government, in which alone, however, the remedial power could be lodged. Id. There is a sense in which Gibbons v. Ogden can be viewed as a negative Commerce Clause case voiding a state transportation barrier. David P. Currie, The Constitution in the Supreme Court the First Hundred Years 1789-1888 at 173 (Univ. of Chicago Press, 1985) (This was the beginning of incessant litigation over the extent to which state legislation is precluded by the commerce clause). As a consequence, it would be just to conclude that the Commerce Clause functioned just as Madison had expected for the first hundred years of national existence. However, beginning with the Interstate Commerce Act in 1887, the Sherman Antitrust Act in 1890, and many other enactments after 1903, Congress began asserting its positive power under the Commerce Clause. In doing so, it was met at first with significant checks from the Supreme Court. Wickard, 317 U.S. at 121-22, 122, n.20 (collecting cases striking down congressional enactments). In general, the Court protected state authority over intrastate commerce by 11
excluding from it activities such as production,` manufacturing,` and mining,` and by removing from its definition activities that merely affected interstate commerce, unless the effect was direct rather than indirect. Id. at 119-20. With respect to citizens, the reach of the Commerce Clause was limited by the Fifth Amendment which, prior to 1938, was held to protect economic liberty through substantive due process. R.R. Ret. Bd. v. Alton R.R. Co., 295 U.S. 330 (1935); see also Lopez, 514 U.S. at 606 (Souter, J. dissenting). Because this regime viewed the regulation even of economic activity as illegitimate unless that activity harmed or threatened harm to someone else, Lochner v. New York, 198 U.S. 45 (1905), it is inconceivable that the Commerce Clause prior to 1938 would have been deemed to validly reach inactivity. The question thus becomes, has the Supreme Court decided any case in the post-Lochner era that has extended the Commerce Clause far enough to cover the mandate and penalty? This Court, in denying the Secretary`s motion to dismiss, has held that it has not. (Doc. 84 at 18, 25, 31) (Never before has the Commerce Clause and associated Necessary and Proper Clause been extended this far.). B. As this Court Found in Denying the Secretary's Motion to Dismiss, the Mandate and Penalty are Outside the Existing Outer Limits of the Commerce Clause and Associated Necessary and Proper Clause as Measured by Supreme Court Precedent.
Although Wickard has been described as perhaps the most far reaching example of Commerce Clause authority over intrastate activity, Lopez, 514 U.S. at 560, it still involved the voluntary activity of raising a commodity which, in the aggregate, was capable of affecting the common stock of wheat. Some of Mr. Filburn`s commodities, as a matter of past practice, had been placed into commerce, and homegrown wheat in the aggregate would affect the total common stock, with a resulting effect on price. The Agricultural Adjustment Act of 1938 contained a definition of market` and its derivatives, so that as related to wheat, in addition to 12
its conventional meaning, it also mean[t] to dispose of by feeding (in any form) to poultry or livestock which, or the products of which, are sold, bartered, or exchanged, or to be so disposed of.` Wickard, 317 U.S. at 118-19. It was Filburn`s practice to sell milk, poultry and eggs from animals fed with his home grown wheat. Id. at 114. The parties stipulated that the use of home grown wheat was the largest variable (greater than 20 per cent) in the domestic consumption of wheat. Id. at 125, 127. This, in turn, permitted the Supreme Court to hold that even if [an] activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as direct` or indirect.` Id. at 125 (emphasis added). This marks the affirmative outer limits of the Commerce Clause. What Wickard stands for, as Lopez and Morrison make clear, is not the proposition that the case expand[s] the commerce power to cover virtually everything, as used to be said. See Currie, supra at 170, n. 89. Instead, Wickard establishes the principle that, when activity has a substantial aggregate impact on interstate commerce, there is no as-applied, de minimis constitutional defense to regulation under the Commerce Clause. See Raich, 545 U.S. at 47-48 (O`Connor dissenting) (The task is to identify a mode of analysis that allows Congress to regulate more than nothing (by declining to reduce each case to its litigants) and less than everything (by declining to let Congress set the terms of analysis.)). Wickard presented itself as a return to the pure and sweeping doctrine established by Gibbons following the Supreme Court`s excursion into Lochnerism. Wickard, 317 U.S. at 11925. However, the dictum of the Wickard Court that Chief Justice Marshall had made statements in Gibbons with respect to the Commerce Clause warning that effective restraints on its exercise
13
must proceed from political rather than from judicial processes is a tautology that conceals more than it reveals. Wickard, 317 U.S. at 120. It is a tautology because it is true of any enumerated power that, when Congress is validly acting under the power, the only effective restraints are political unless some other positive prohibition applies. See Morrison, 529 U.S. at 616, n. 7 (The assertion that from Gibbons on, public opinion has been the only restraint on the congressional exercise of the commerce power is true only insofar as it contends that political accountability is and has been the only limit on Congress` exercise of the commerce power within that power's outer bounds . . . Gibbons did not remove from this Court the authority to define that
boundary.) (emphasis in original). What the Wickard tautology also conceals is Marshall`s actual holding in Gibbons that the terms to regulate and Commerce . . . among the several States are bounded, with judicially ascertainable meaning, and his further holding that the Commerce Clause does not reach transactions that affect only intrastate commerce. Gibbons, 22 U.S. (9 Wheat.) at 189-90, 196. Since Wickard, the Supreme Court has progressed no further than to hold that Congress can regulate three things under the Commerce Clause: (1) use of the channels of interstate commerce (2) the instrumentalities of interstate commerce, and (3) activities that substantially affect interstate commerce. Lopez, 514 U.S. at 558-59 (emphasis added); (Doc. 84 at 18-19 (It appears from the argument and memoranda of counsel that only the third category is implicated in the case at hand.)). The majority in Raich (Stevens, Kennedy, Souter, Ginsburg and Breyer) went no further than to display a willingness to accept congressional findings that home-grown marijuana in the aggregate has a substantial effect on interstate commerce. Raich, 545 U.S. at 18-19. The challenge in Raich was not facial, but involved an atomized, as-applied challenge of the sort foreclosed by Wickard. Id. at 15, 23.
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In addition to the affirmative, tripartite definition of the commerce power, the Supreme Court has developed a workable negative rule for determining when the outer limits of the Commerce Clause have been exceeded: a facial challenge will succeed when Congress seeks to regulate non-economic activities, particularly where the claimed power has no principled limits, requiring the Court to conclude that the Constitution`s enumeration of powers does not presuppose something not enumerated and that there never will be a distinction between what is truly national and what is truly local. Lopez, 514 U.S. at 567-68. (Chief Justice Rehnquist for the Court, joined by Justices O`Connor, Scalia, Kennedy, and Thomas) (citations omitted). As Justice Kennedy stated in his concurrence in Lopez: Although it is the obligation of all officers of the Government to respect the constitutional design, the Federal balance is too essential a part of our constitutional structure and plays too vital a role in securing freedom for us to admit inability to intervene when one or the other level of Government has tipped the scales too far. Id. at 578 (citations omitted). That principle was found applicable in Morrison because the federal government was attempting to exercise police powers denied to it by the Constitution. Morrison, 529 U.S. at 618-19 (We always have rejected readings of the Commerce Clause and the scope of federal power that would permit Congress to exercise a police power.`) (emphasis in original) (citations omitted). Not only are the mandate and its penalty provision a part of the police power
conceptually, but historically, commands to act, such as vaccination and school attendance laws, have been justified under the state police power. See Gonzales v. Oregon, 546 U.S. 243, 270 (2006) (protection of the lives, limbs, health, comfort and quiet of all persons falls within state
15
police power). Furthermore, the decision not to buy insurance is not itself even a part of the business of insurance.1 None of this is changed by the Secretary`s appeal to the Necessary and Proper Clause. Each enumerated power of Congress is modified by this statement: To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof. Art. I, § 8. On May 17, 2010, the United States Supreme Court spoke to the meaning of the Necessary and Proper Clause in opinions that foreclose the use of the provision to sustain the mandate and its penalty provision. United States v. Comstock, 130 S. Ct. 1949, 176 L. Ed. 2d 878 (2010). Beginning with the dissent, Justice Thomas and Justice Scalia
categorically stated: Under the Court`s precedents, Congress may not regulate non-economic activity (such as sexual violence) based solely on the effect such activity may have, in individual cases or in the aggregate, on interstate commerce. Id. at 1973, 176 L. Ed. 2d at 908 (citing Morrison and Lopez) (emphasis added). Under that view, by definition, Congress cannot
regulate based upon aggregation of the non-economic inactivity of not owning health insurance. With respect to the concurrences, Justice Kennedy concurred because the civil commitment of federal prisoners at issue was a narrow, traditional function of the federal government that is not in competition with the general state police power. Id. at 1968, 176 L. Ed. 2d 902-3. Justice Alito concurred because the power to hold federal prisoners was supported
1
Because the mandate and penalty are not regulation of the business of insurance within the meaning of the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq., this Court need not decide whether the express waiver required by Life Partners, Inc. v. Morrison, 484 F.3d 284, 292 (4th Cir. 2007), cert. denied, 2007 U.S. LEXIS 12349 (Dec. 3, 2007), can be found in PPACA. (See Doc. 84 at 6, n.1). Commandeering the American people to purchase insurance is an attempted police power regulation of citizens, not a regulation of the business of insurance. 16
by deep history, going back to the First Congress, and the power of civil commitment is merely incidental to that ancient power. Id. at 1969-70, 176 L. Ed. 2d at 903-05. The majority opinion upheld the law under a five part test: first, whether there is meansends rationality between the enumerated power and the means chosen; second, whether the activity is one of long standing; third, if the reach of a longstanding practice is being extended, whether it is a reasonable one; fourth, whether the statute properly accounts for state interests; and fifth, whether the links between the means chosen and an enumerated power are too attenuated. Id. at 1956-63, 176 L. Ed. 2d at 889-97. When the majority applied these factors to the facts of Comstock, they upheld the civil commitment statute because of (1) the breadth of the Necessary and Proper Clause, (2) the long history of Federal involvement in this area, (3) the sound reasons for the statute`s enactment in light of the Government`s custodial interest in safeguarding the public from dangers posed by those in Federal custody, (4) the statute`s accommodation of state interests [the States have a right of first refusal for custody upon release but historically have wanted nothing to do with paying for these federal prisoners], and (5) the statute`s narrow scope. Id. at 1965, 176 L. Ed. 2d at 899. Here, in contrast, (1) the rationality of the ends-means fit is weak because there is a traditional Anglo-American dislike of compulsion in financial transactions involving government, not only at the time of the Founding, but extending back to forced loans under the Stuarts; (2) the history of federal involvement is nonexistent; (3) the mandate and its penalty provision are not a reasonable extension of a pre-existing practice; (4) the asserted power represents a claim of police power in competition with that of the States, and (5) the claimed power has no principled limits. The Necessary and Proper Clause simply does not save the
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Congressional overreach inherent in a command to purchase a good or service from another citizen under threat of a civil penalty. Having demonstrated that the mandate and penalty are not comprehended within the outer limits of the Commerce Clause and associated Necessary and Proper Clause, it remains to be considered whether they can be supported as a lawful tax. IV. THE MANDATE AND PENALTY CANNOT BE SUSTAINED UNDER THE TAXING POWER.
A threshold problem with the Secretary`s resort to the taxing power is that no one can seriously call the mandate a tax. If the mandate is beyond the enumerated powers of Congress, it is unconstitutional. Furthermore, the penalty is a penalty, not a tax. First, it should be remembered that it was Congress itself which called the payment for failure to comply with the mandate a penalty, PPACA § 1501 at § 5000A(b)(1), and that the President similarly declared that it was not a tax. (Doc. 84 at 25) (Contrary to pre-enactment representations by the Executive and Legislative branches, the Secretary now argues alternatively that the minimum essential coverage provision is a product of the government`s power to tax for the general welfare.). Elsewhere in PPACA, Congress levied taxes
denominated as such, demonstrating that it knew how to draw the distinction. See, e.g., PPACA §§ 9001; 9004; 9015; 9017; 10907. In the taxing arena, the Supreme Court has refused to permit litigants to denominate as a tax that which Congress has denominated an exercise of commerce power. Bd. of Trs. of the Univ. of Ill. v. United States, 289 U.S. 48, 58 (1933) (But if the Congress may thus exercise the power, and asserts, as it has asserted here, that it is exercising it, the judicial department may not attempt in its own conception of policy to distribute the duties thus fixed by allocating some of them to the exercise of the admitted power to regulate commerce and others to an independent exercise of the taxing power.). 18
Second, the penalty, speaking historically and in light of traditional norms, is simply not a tax. A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the Government.` Rosenberger v. Rector & Visitors of the Univ. of Va., 515 U.S. 819, 841 (1995), quoting United States v. Butler, 297 U.S. 1, 61 (1936). In contrast, the purpose of the penalty is to alter conduct in hopes that the penalty will not be collected at all. Crucially for this case, the question whether an exaction is a tax or a penalty is justiciable. See Rosenberger, 515 U.S. at 841; United States v. La Franca, 282 U.S. 568, 572 (1931). Although an Act of Congress which on its face purports to be an exercise of the taxing power, and which is actually a tax and not a regulatory penalty, will be upheld without collateral inquiry into the regulatory motive of Congress, Sonzinsky v. United States, 300 U.S. 506, 511, 513 (1937) (distinguishing Child Labor Tax Case), a true penalty is not a tax. La Franca, 282 U.S. at 572 (The two words [tax vs. penalty] are not interchangeable . . . and if an exaction [is] clearly a penalty it cannot be converted into a tax by the simple expedient of calling it such.) (quoted in Doc. 84 at 26-27 n.7). For nearly a hundred years, the United States Supreme Court has recognized that taxes and penalties are separate and distinct, stating that [a] tax is an enforced contribution to provide for the support of government; a penalty, as the word is here used, is an exaction imposed by statute as punishment for an unlawful act. United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U.S. 213, 224 (1996), quoting La Franca, 282 U.S. at 572. As the La Franca court held, the word tax and the word penalty are not interchangeable, one for the other. No mere exercise of the art of lexicography can alter the essential nature of an act or a thing; and if an exaction be clearly a penalty it cannot be converted into a tax by the simple expedient of 19
calling it such. That the exaction here in question is not a true tax, but a penalty involving the idea of punishment for infraction of the law is settled . . . . La Franca, 282 U.S at 572. To prevail, the Secretary`s taxing power argument requires that this Court first ignore Congress`s express decision to denominate the individual mandate penalty a penalty, and then to alter the essential nature of the penalty by ignoring its function so that it can be called a tax. Because such steps would have the Court rewriting the statute, as opposed to interpreting it, the Secretary`s argument must fail. Simply put, the taxing power does not and cannot provide the basis for the penalty. Because the PPACA penalty is a penalty in contemplation of law, the following syllogism holds: If the penalty cannot be sustained under the Commerce Clause and associated Necessary and Proper Clause, it cannot be upheld as an exercise of the taxing power because it is not a penalty in aid of a tax. It is instead a naked penalty seeking in vain to attach itself to an enumerated power. As this Court stated in denying the Secretary`s motion to dismiss, Virginia correctly noted during oral argument that the power of Congress to exact a penalty is more constrained than its taxing power under the General Welfare Clause ­ it must be in aid of an enumerated power. Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 393, 60 S. Ct. 907, 912 (1940); United States v. Butler, 297 U.S. 1, 61, 56 S. Ct. 312, 317 (1936). (Doc. 84 at 27). The Constitution recognizes direct taxes, which must be apportioned, Art. I, § 9, and income taxes, which need not be apportioned, Amend. XVI, as well as duties, imposts and excises, which must be uniform throughout the United States. Art. I, § 8. These apparently embrace all forms of taxation contemplated by the Constitution. See Thomas v. United States, 192 U.S. 363, 370 (1904) (pre-Sixteenth Amendment analysis of direct and indirect taxes). Historically, direct taxes were taxes on persons or things, while duties, imposts and excises have never meant a tax on a decision not to purchase or not to do something unrelated to a larger 20
voluntary business or other undertaking. And while the penalty was codified in the same act as actual excise taxes, excises historically consist of taxes imposed on the production, sale, or consumption of certain commodities or are business license taxes. The American Heritage Dictionary 457 (Houghton Mifflin Co. Boston 1981). Moreover, even if the penalty were a tax, as long as it is being used for regulation, it must pass muster under an enumerated power other than the taxing power justifying the regulation. Child Labor Tax Case, 259 U.S. 20 (1922). See also R.R. Labor Executives' Ass'n v. Gibbons, 455 U.S. 457, 468-69 (1982) (alternative power will not be used to support enactment if it evades the limits of another grant). As this Court noted in its prior opinion, Virginia contends that [t]he law is that Congress can tax under its taxing power that which it can`t regulate, but it can`t regulate through taxation that which it cannot otherwise regulate.` (Tr. 81; 18-21, July 1, 2010 (citing Bailey v. Drexel Furniture Co. (Child Labor Tax Case), 259 U.S. 20, 37, 42 S. Ct. 449, 450 (1922)). (Doc. 84 at 27-28). See also Butler, 297 U.S. at 68; Linder v. United States, 268 U.S. 5, 17-18 (1925). Although the Secretary maintains that this line of cases has fallen into desuetude, (Doc. 84 at 28), such an argument is not available to her outside of the Supreme Court. Rodriguez de Quijas v. Shearson/American Express, 490 U.S. 477, 484 (1989) (If a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions) (cited with approval in United States v. O'Brien, 130 S. Ct. 2169, 2174, 176 L. Ed. 2d 979, 986 (2010)).
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Because these controlling cases have not been overruled, they are binding at this stage of the litigation.2 Ultimately, the problem with the tax argument is the same problem as with the Commerce Clause argument: it is anti-textual, anti-historical and contrary to precedent. The imposition of a penalty for failing to obey a command to do what the government wants is neither the regulation of commerce nor taxation; it is an exercise of police power denied to the federal government. V. THE FACT THAT THE MANDATE AND PEANLTY ARE BEYOND THE OUTER LIMITS OF THE COMMERCE CLAUSE IS FATAL TO THE SECRETARY'S CASE.
Courts inferior to the Supreme Court should consider themselves constrained by the rule of Rodriquez de Quijas, 490 U.S. 477, and thus, must reject the Secretary`s invitation to extend existing precedent in order to uphold the mandate and penalty. If the penalty is deemed a tax, it is a regulatory tax. Under the Child Labor Tax Case and United States v. Butler, a regulatory tax must be supported by an enumerated power separate and apart from the taxing power. But this Court should never reach that issue under Rodriquez de Quijas because, under La Franca, the penalty is not a tax but a naked penalty. As such it requires an enumerated power for its support. The penalty is not in aid of the taxing power because the mandate is not a tax. Because the Commerce Clause is the only other conceivable enumerated power available to support the penalty, the tax argument collapses back into the Commerce Clause inquiry.
2
Even if the penalty were deemed to be a non-regulatory tax ­ a legal impossibility under existing precedent ­ it would still be unconstitutional either as an unapportioned capitation tax or as a non-uniform excise. It is non-uniform because the contents of the mandated policy of insurance triggering it is not geographically uniform. 22
This Court should decline the Secretary`s invitation to extend Wickard and Raich because legal precedent is customarily extended incrementally by analogy, and there is nothing analogous between commodity regulation and the mandate. Under Rodriquez de Quijas, this Court is not authorized to extend the negative outer limits of the Commerce Clause established by Lopez and Morrison. Again, as the Supreme Court said in Morrison: We always have rejected readings of the Commerce Clause and the scope of Federal power that would permit Congress to exercise a police power. Morrison, 529 U.S. at 618 (emphasis in original). This statement is sweeping and categorical. It applies alike to all sources of Federal power and not just to the Commerce Clause. Because the claimed power to force a citizen to buy a good or service from another citizen is without principled limits, it is indistinguishable from a national po

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